China’s foreign exchange authority has just cancelled the ceiling on the remittance of funds by qualified foreign institutional investors (QFII), as part of broader efforts to facilitate cross-border securities investment.
The State Administration of Foreign Exchange (SAFE) has just issued the “Qualified Foreign Institutional Investor Domestic Securities Investment Foreign Exchange Administrative Provisions” (合格境外机构投资者境内证券投资外汇管理规定), while both SAFE and the People’s Bank of China (PBOC) will soon issue the “PBOC and SAFE Notice Concerning Issues in Relation to the Regulation of Domestic Securities Investment by Renminbi Qualified Foreign Institutional Investors” (中国人民银行 国家外汇管理局关于人民币合格境外机构投资者境内证券投资管理有关问题的通知).
The new measures rescind the 20% ceiling on monthly repatriations by dollar-denominated QFII’s, as well as the lockup period on investment principals for both QFII’s and Renminbi Qualified Foreign Institutional Investors (RQFII).
According to an official statement from SAFE the new measures seek to “further raise the ease of cross-border securities investment.”
SAFE has also allowed QFII and RQFII to engage in forex hedging in China.
The move arrives just following the inclusion of more than 200 Chinese shares in the MSCI Emerging Markets Index, and broader efforts by Beijing to further open up China’s financial sector.